Home purchase activity slows in June but remortgaging levels high

Written by Oliver Wade
14/08/2018

Throughout June, there were 34,900 new first-time buyer mortgages completed, 3.6% lower than the figure reported in June 2017, equating to £5.8bn of new lending and representing a decrease of 1.7% year-on-year, according to UK Finance’s Mortgage Trends Update for June 2018.

UK Finance revealed that the average first-time buyer is 30 and has a gross household income of £42,000.

This trend continued among homemovers, of which there were 33,700 mortgages completed in June, some 7.9% fewer than in June last year. The £7.3bn of new lending in the month was 6.4% down year-on-year, with the average homemover being 39 and having a gross household income of £56,000.

The update found that there were 37,400 new homeowner remortgages completed in the month, which is up 8.4% compared to the same month last year, and resulted in an increase of 13.3% to the amount lent year-on-year at £6.8bn.

In June 5,400 new buy-to-let (B2L) home purchase mortgages were completed, which saw nearly a 20% dip compared to June 2017’s figures, and totalled £0.8bn worth of lending and an 11.1% decline year-on-year.

Commenting on the data, UK Finance director of mortgages Jackie Bennett said: “Remortgaging continued to dominate in June with figures up 13 per cent on the same period last year as existing two and three year products came to an end and borrowers opted for new deals.

“Despite a boost in recent months, speculation of a base rate rise saw the market remain relatively subdued with year-on-year declines in activity among both first time buyers and homemovers as customers adopted a ‘wait and see’ approach.”

Trussle CEO and founder Ishaan Malhi echoed the comments from Bennett in relation to remortgaging levels, stating that it “drove market activity in June”, as borrowers were switching to new deals in anticipation of the Bank of England’s interest rate rise.

“While it's good to see more people engaging with their mortgage, there are still around two million home owners sitting on high-interest Standard Variable Rate mortgages, collectively overpaying billions of pounds in additional interest each year. If we're to help these people, the industry needs to make mortgage deals more transparent and ditch the jargon that currently prevents more than half of all mortgage borrowers from fully understanding important letters from their lender,” Malhi added.

OneSavings Bank sales and marketing director John Eastgate further commented on the results, saying that: “The housing market slowed as economic uncertainties persisted thanks to Brexit and well-founded expectations of a rate rise.

“Stamp duty continues to deter purchase activity in more expensive areas and this has consequences for the whole market, so the large fall in purchase activity is no great surprise. With activity falling, housebuilding way off its long term target and a continuing lack of political clarity on housing policy, we will surely see a continuation of current housing challenges.

“The social housing sector clearly won’t be able to plug the demand gap, with any form of additional funding conspicuous by its absence in the social housing green paper. All this means is that as demand for housing continues to grow, supply isn’t rising fast enough, so rather than taxing the PRS more, as has been speculated, it should be seen as part of the solution.”

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